If pressed, could you tell me the country that offered the best stock returns over the past 12 months? It's harder than you probably think, because they're not the countries you might expect.

You call that a market?
American investors are suffering this year. The S&P 500 is down roughly 12% over the past year. That's abysmal ... and particularly abysmal when compared to some other global markets.

Without further ado, the top five performers:









Cote d'Ivoire




Source: Motley Fool Global Gains research.

This list is incredible to me. Lebanon? Mauritius?

We can learn a few things from this list. First, if you're an American investor, it's absolutely crucial to be invested abroad. The potential returns to be had there are too good to pass up. Second, the best returns often come from obscure places -- not from the countries we read about every day in the papers. And finally, there is some risk involved in investing internationally. For example, because of crime, corruption, and treacherous inflation, Zimbabwe isn't exactly a country American investors should be interested in.

Buy what others aren't
The main lesson here is old hat: To get the best returns, you need to be willing (and able) to look where other investors aren't. That's why the best domestic stocks of the past 10 years were all small caps.

See, huge numbers of investors and analysts watch large companies and popular markets. Motorola (NYSE: MOT), Home Depot (NYSE: HD), and Citigroup (NYSE: C), for example, get coverage from 20 or more analysts. Those three popular stocks also have more than 1,800 ratings in our Motley Fool CAPS community intelligence database.

In other words, they're probably pretty efficiently priced.

You'll get the best returns, however, by finding market inefficiencies. And while another 1,500 investors are covering AT&T (NYSE: T) and FedEx (NYSE: FDX) in CAPS, you can't find a stock from any one of those countries on a major U.S. exchange!

The Foolish bottom line
That's where your opportunity lies as a Foolish investor. But as I said, international investing is not without risks. If you'd like some help finding worthy international investing ideas that you may never have heard of, click here to try our Global Gains service free for 30 days.

There is no obligation to subscribe, and our team recently returned from a research trip to Asia with three top-notch stock ideas for Global Gains members.

This article was originally published on Dec. 13, 2006 as "The 10 Best Places to Invest." It has been updated.

Tim Hanson does not own shares of any company mentioned. Home Depot is a Motley Fool Inside Value recommendation. FedEx is a Stock Advisor pick. No Fool is too cool for disclosure.